Published : Feb. 5, 2017 - 16:10
Local analysts say LG Electronics will see a turnaround in the first quarter because of strong sales of its upcoming flagship smartphone G6 to be unveiled in February at the Mobile World Congress.
The Korean tech firm posted an operating loss of 35.2 billion won ($30.6 million) in the fourth quarter last year. The first loss in six years was mainly due to its money-losing mobile communications unit, which had a record-breaking operating loss of 467 billion won in the quarter and a cumulative operating loss of 1.2 trillion won throughout the year.
This time, analysts showed high expectations on LG’s G6 due to its advanced specifications and LG’s proven success with the V20, which was launched in October, in the US market.
Shinhan, KB, Mirae Asset, Daishin and KTB securities have all raised the company’s share price target over the last two months and LG’s stock price has jumped 25 percent during the period.
Song Eun-jeong, an analyst at Hi Investment and Securities said, “G6, unlike in the past, will have advanced specifications and design reflecting the current market trend. Strong sales in smartphones alongside premium home appliances will make the company see a turnaround with an operating profit of 375 billion won in the first quarter.”
As to the company’s mobile communications unit, “If the company can secure stable supply, it can reduce an operating loss of more than 800 billion won this year,” Song said.
LG V20
Soh Hyun-cheol, an analyst at Shinhan Investment & Securities, said LG’s G6 is expected to appeal to US consumers based on the success of V20.
“LG saw record-breaking smartphone sales of 7.7 million units in the US in the fourth quarter, a 13 percent rise year-on-year, on strong sales of V20,” Soh said, adding that V20 grabbed more than a 16 percent share in the US market.
“G6, unlike G5, will be a premium smartphone, which reflects consumers’ needs including simple design, waterproof function, dual camera and wireless charging,” the analyst said, adding G6 will sell around 7 million units double the sales of its predecessor G5.
He also predicted the mobile communications unit’s operating profit will be reduced to 195 billion won in the first quarter.
LG said the upcoming G6 will have a 5.7-inch (14.5 centimeters) Quad HD liquid crystal display panel with a ratio of 18:9. The world’s first 18:9 ratio will provide users with greater immersion than previous displays and allow consumers to multitask by using the dual-screen feature.
The phone is also expected to ditch its removable battery and have a sealed battery like the iPhone and Galaxy S phones to make the phone water resistant. It may have the fingerprint sensor on the back of the phone and adopt payment service LG Pay for the first time based on magnetic security transmission methods, such as Samsung Pay.
By Shin Ji-hye (shinjn@heraldcorp.com)